This is the accessible text file for GAO report number GAO-06-364
entitled 'Joint Strike Fighter: Management of the Technology Transfer
Process' which was released on March 14, 2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives:
United States Government Accountability Office:
GAO:
March 2006:
Joint Strike Fighter:
Management of the Technology Transfer Process:
GAO-06-364:
GAO Highlights:
Highlights of GAO-06-364, a report to the Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations,
Committee on Government Reform, House of Representatives:
Why GAO Did This Study:
The Joint Strike Fighter (JSF) program is the Department of Defense’s
(DOD) largest international cooperative effort to develop and produce a
major weapon system. Due to the breadth of international participation,
the number of export authorizations needed to share information with
partner governments, solicit bids from suppliers, and execute contracts
is expected to far exceed past transfers of advanced military
technology.
In July 2003, GAO reported that managing these transfers and partner
expectations while avoiding delays has been a key challenge and
recommended that industrial planning tools be developed and used to
anticipate time frames for national disclosure and technology transfer
decisions. This report examines DOD’s response to this recommendation
and identifies the practices DOD is using to expedite license
processing and avoid program delays.
What GAO Found:
Agencies have taken four key actions to expedite the processing of
licenses for transferring technology to partner countries and foreign
suppliers. Each of these practices is intended to anticipate time
frames needed for the processing of licenses or avoid delays to the JSF
program schedule.
* In response to GAO’s 2003 recommendation, the JSF Program Office
instructed the prime contractor to develop an international industrial
plan that identifies the type of license needed to transfer certain
technologies to foreign industry. The contractor’s plan provides
mechanisms for anticipating “need” dates for submitting license
applications and for identifying and addressing potential issues
related to the releasability of classified information, technologies,
or systems. In addition to the contractor’s plan, DOD has developed
guidance calling for industrial planning tools in all programs with
significant international involvement.
* Agencies involved in the JSF program are expediting the processing of
license applications by dedicating staff to the JSF licensing process,
providing consultation to applicants on draft licenses, administering a
prescreening process for the transfer of low technology and
nonsensitive items, and allowing addendums to be attached to license
applications.
* The JSF prime contractor and agency officials have used options
available to them under the International Traffic in Arms Regulations,
such as Global Project Authorization (GPA) and an exemption used in
obtaining foreign contractor bids and proposals, to help facilitate the
export control process and avoid program delays. While GPA is designed
to approve exports within 5 days, its use has been limited.
* Due to the early involvement of international partners in the design
phase of the program, decisions related to the releasability of
classified information, technologies, or systems to partner countries
have been addressed as they arise throughout the development of the
system.
Joint Strike Fighter:
[See PDF for image]
[End of figure]
www.gao.gov/cgi-bin/getrpt?GAO-06-364.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Ann Calvaresi-Barr (202)
512-4841 or calvaresibarra@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Actions Taken to Expedite License Processing and Avoid Program Delays:
Agency Comments:
Appendix I: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Table:
Table 1: Joint Strike Fighter Partner Financial Contributions and
Estimated Aircraft Purchases:
Abbreviations:
AECA: Arms Export Control Act:
DDTC: Directorate of Defense Trade Controls:
DOD: Department of Defense:
DTSA: Defense Technology Security Administration:
FAR: Federal Acquisition Regulation:
GPA: Global Project Authorization:
ITAR: International Traffic in Arms Regulations:
JSF: Joint Strike Fighter:
MOU: memorandum of understanding:
NDPC: National Disclosure Policy Committee:
United States Government Accountability Office:
Washington, DC 20548:
March 14, 2006:
The Honorable Christopher Shays:
Chairman,
Subcommittee on National Security, Emerging Threats, and International
Relations:
Committee on Government Reform:
House of Representatives:
Dear Mr. Chairman:
The Joint Strike Fighter (JSF) program is the Department of Defense's
(DOD) largest experiment to collaboratively develop and produce a major
weapon system with international partners to date with an estimated
cost of over $250 billion for the development and production phases of
the program. It is a joint program among the Air Force, Navy, Marine
Corps, and eight international partners for developing and producing a
next-generation fighter aircraft to replace aging inventories. Due to
the degree of international participation at both the government and
industry levels, a large number of export authorizations are necessary
to share project information with governments, solicit bids from
partner suppliers, and execute contracts. The transfer of technologies
necessary to achieve aircraft commonality goals in the JSF program is
expected to far exceed past transfers of advanced military technology.
A key challenge for the program has been managing the technology
transfer process and partner expectations while avoiding delays to the
program.
In July 2003, we reported that due to the early involvement of
international partners in developing the system, the JSF program has
had to mitigate a particular set of challenges related to technology
transfers. We recommended that the JSF program ensure that industrial-
planning tools are developed and used to anticipate time frames for
national disclosure and technology transfer decisions.[Footnote 1]
Subsequently, you asked us to examine issues raised in our 2003 work
related to technology transfer and the JSF program and describe the
status of DOD planning efforts designed to address technology transfer
and export control requirements among the U.S. government, JSF prime
contractors, foreign partners, and foreign industry. Specifically, we
identified the practices DOD is using to expedite license processing
and avoid program delays.
In carrying out our work, we reviewed the prime contractor's newly
developed international industrial plan and compared it to a prior GAO
recommendation. To determine the manner in which U.S. export control
processes are being applied in the JSF program, we interviewed and
gathered data from export control and JSF officials from DOD, the
Department of State, and the prime contractor. The international
partners did not discuss issues related to technology transfer with us
due to the status of current negotiations on a memorandum of
understanding for the production phase of the program. The partners
generally expressed the opinion that comments by them during
negotiations would not be appropriate. We conducted our review from
March 2005 to January 2006, in accordance with generally accepted
government auditing standards.[Footnote 2]
Results in Brief:
Agencies have taken a number of actions to address technology transfer
issues associated with the JSF program. In response to our 2003
recommendation, the JSF Program Office tasked the prime contractor to
develop an international industrial plan to anticipate time frames for
national disclosure and technology transfer decisions. The Office of
the Secretary of Defense also issued guidance calling for the use of
similar industrial-planning tools for other development programs that
include foreign partners. Further, DOD is using a variety of practices
to expedite the processing of export control licenses for the JSF
program. For example, agencies have staff specifically dedicated to the
JSF licensing process to focus agency resources on the JSF program. In
addition, agency stakeholders provide consultation to license
applicants on draft licenses, and all formal license applications are
prescreened to determine if they are eligible for an abbreviated review
process. The JSF prime contractor and agency officials have also used
options available to them under the International Traffic in Arms
Regulations, such as a Global Project Authorization and an exemption
used in obtaining bids and proposals from foreign contractors.[Footnote
3] The Global Project Authorization was intended to be a mechanism for
approving the transfer of low technology, nonsensitive items between
pre-approved U.S. and foreign companies in about 5 days; however, this
mechanism's use has been limited. Additionally, to avoid program
delays, the JSF program office has certified 350 requests from U.S.
contractors to use the "bid and proposal exemption," allowing the
transfer of information without a license between approved U.S. and
foreign contractors for purposes of obtaining bids and proposals.
Further, due to the involvement of international partners in the early
design phase of the program, issues related to the releasability of
classified information, technologies, and systems will continue to be
addressed as they arise.
Background:
The JSF program began in 1996 and is the largest DOD acquisition
program to date with an estimated cost of over $250 billion for the
development and production phase of the program. The program's goals
are to develop and field a family of stealthy fighter aircraft for the
Navy, Air Force, Marine Corps, and U.S. allies. To achieve its mission,
JSF will incorporate low observable technologies, defensive avionics,
advanced onboard and offboard sensor fusion, internal and external
weapons, and advanced prognostic maintenance capability. The program
intends to produce three variants. The carrier suitable variant will
complement the Navy's F/A-18 E/F. The conventional take-off and landing
variant will primarily be a replacement for the Air Force's F-16 and A-
10 aircraft and will complement the F-22A. The short take-off and
vertical landing variant will replace the Marine Corps' F/A-18 and AV-
8B aircraft.
In October 2001, Lockheed Martin was awarded a contract to develop the
airframe and integrate the system components. Subsequently, Lockheed
Martin awarded multi-billion-dollar subcontracts to its development
teammates--Northrop Grumman and BAE Systems--for work on the center and
aft fuselage, respectively. In addition to the Lockheed Martin
contract, DOD has contracts with both Pratt & Whitney and General
Electric to develop two interchangeable aircraft engines. The program
is currently in the fifth year of an estimated 12-year development
phase. The current estimated cost for the development phase is about
$41.5 billion.
The JSF program is an international cooperative program consisting of
the U.S. and eight foreign partners: the United Kingdom, Italy, the
Netherlands, Turkey, Denmark, Norway, Canada, and Australia. The JSF
program structure was established through a framework memorandum of
understanding (MOU) and individual supplemental MOUs between each of
the partner country's defense department or ministry and DOD,
negotiating on behalf of the U.S. government. These agreements identify
the roles, responsibilities, and expected benefits for all
participants. Currently DOD is negotiating one MOU for all partner
countries related to the production phase of the program.
The JSF program allowed foreign countries to become partners at one of
three participation levels during the system development and
demonstration phase of the program, based on financial contribution. In
return for their contributions, partner countries receive proportionate
benefits, such as number of staff represented in the program office,
access to program data and technology, and membership on management
decision-making bodies. As shown in table 1, the foreign partners plan
on contributing over $4.5 billion, or about 11 percent, for the system
development and demonstration phase and are expected to purchase over
700 aircraft beginning in the 2012 to 2015 time frame. Israel and
Singapore are involved as security cooperation participants, a
nonpartner arrangement, which offers limited access to program
information. According to DOD, foreign military sales to these and
other nonpartner countries could include an additional 1,500 to 3,000
aircraft.
Table 1: Joint Strike Fighter Partner Financial Contributions and
Estimated Aircraft Purchases:
Dollars in millions.
Partner country: United Kingdom;
System development and demonstration: Partner level: Level I;
System development and demonstration: Financial contributions[A]:
$2,056;
System development and demonstration: Percentage of total costs: 5.0%;
Productions: Projected quantities[B]: 150;
Productions: Percentage of total quantities: 4.7%.
Partner country: Italy;
System development and demonstration: Partner level: Level II;
System development and demonstration: Financial contributions[A]:
$1,028;
System development and demonstration: Percentage of total costs: 2.5%;
Productions: Projected quantities[B]: 131;
Partner country: Productions: Percentage of total quantities: 4.1%.
Partner country: Netherlands;
System development and demonstration: Partner level: Level II;
System development and demonstration: Financial contributions[A]: $800;
System development and demonstration: Percentage of total costs: 1.9%;
Productions: Projected quantities[B]: 85;
Productions: Percentage of total quantities: 2.7%.
Partner country: Turkey;
System development and demonstration: Partner level: Level III;
System development and demonstration: Financial contributions[A]: $175;
System development and demonstration: Percentage of total costs: 0.4%;
Productions: Projected quantities[B]: 100;
Productions: Percentage of total quantities: 3.2%.
Partner country: Australia;
System development and demonstration: Partner level: Level III;
System development and demonstration: Financial contributions[A]: $144;
System development and demonstration: Percentage of total costs: 0.3%;
Productions: Projected quantities[B]: 100;
Productions: Percentage of total quantities: 3.2%.
Partner country: Norway;
System development and demonstration: Partner level: Level III;
System development and demonstration: Financial contributions[A]: $122;
System development and demonstration: Percentage of total costs: 0.3%;
Productions: Projected quantities[B]: 48;
Productions: Percentage of total quantities: 1.5%.
Partner country: Denmark;
System development and demonstration: Partner level: Level III;
System development and demonstration: Financial contributions[A]: $110;
System development and demonstration: Percentage of total costs: 0.3%;
Productions: Projected quantities[B]: 48;
Productions: Percentage of total quantities: 1.5%.
Partner country: Canada;
System development and demonstration: Partner level: Level III;
System development and demonstration: Financial contributions[A]: $100;
System development and demonstration: Percentage of total costs: 0.2%;
Productions: Projected quantities[B]: 60;
Productions: Percentage of total quantities: 1.9%.
Total partner;
System development and demonstration: Financial contributions[A]:
$4,535;
System development and demonstration: Percentage of total costs: 10.9%;
Productions: Projected quantities[B]: 722;
Productions: Percentage of total quantities: 22.8%.
United States;
System development and demonstration: Financial contributions[A]:
$36,946;
System development and demonstration: Percentage of total costs: 89.1%;
Productions: Projected quantities[B]: 2,443;
Productions: Percentage of total quantities: 77.2%.
Source: DOD and JSF Program Office.
[A] Chart values do not reflect nonfinancial contributions from
partners.
[B] Partner quantities are preliminary and were developed for U.S.
planning purposes. The estimates were developed by the United States in
collaboration with partner countries, but no specific national
agreements or arrangements have been established with partner countries
for production; therefore, these projected production quantities are
subject to change.
[End of table]
DOD has stated that the core objectives of armaments cooperation are to
increase military effectiveness through standardization and
interoperability and to reduce weapons acquisition costs by avoiding
duplication of development efforts with U.S. allies. According to DOD
and the program office, through its cooperative agreements, the JSF
program contributes to armaments cooperation policy in four areas:
* political/military--expanded foreign relations;
* economic--decreased JSF program costs from partner contributions;
* technical--increased access to the best technologies of foreign
partners; and:
* operational--improved mission capabilities through interoperability
with allied systems.
Under the Arms Export Control Act (AECA), DOD is provided the authority
to enter into cooperative programs with certain U.S. allies.[Footnote
4] In March 1997, the Secretary of Defense directed that DOD engage
allies in discussions as early as possible to determine the potential
for collaboration to meet coalition needs and ensure interoperability
among allied systems. DOD guidance states that the department will give
favorable consideration to transfers of defense articles, services, and
technology consistent with national security interests to support these
international programs. Unlike other international cooperative
programs, the JSF program does not guarantee foreign or domestic
suppliers a predetermined level of work based on a country's financial
contribution to the program. Instead, foreign and domestic suppliers
will generally bid competitively for JSF work. DOD and the JSF Program
Office use the term "best value" to describe this competitive
approach.[Footnote 5]
The AECA also provides statutory authority for the control of defense
articles and services.[Footnote 6] The Department of State oversees the
export of military items and services.[Footnote 7] The Directorate of
Defense Trade Controls (DDTC) within the Department of State has been
delegated the authority to regulate arms exports and administer the
arms export-licensing system. The Defense Technology Security
Administration (DTSA) represents DOD on export control issues. DTSA
provides technical and national security reviews of and coordinates
DOD's position on export license applications referred or reviewed by
DDTC. Due to the degree of international participation at both a
governmental and an industry level in the JSF program, a large number
of export authorizations are necessary to share project information
with governments, solicit bids from partner suppliers, and execute
contracts. The transfer of technologies necessary to achieve aircraft
commonality goals for the JSF program is expected to far exceed past
transfers of advanced military technology for other systems.
Before transfers are approved, the U.S. government must first determine
if weapons or technologies are releasable to the requesting country
according to the National Disclosure Policy. The National Disclosure
Policy establishes procedures and criteria for releasing classified or
sensitive military information to other countries. The National
Disclosure Policy Committee (NDPC) is responsible for managing the
National Disclosure Policy, making determinations whether to grant
exceptions to the policy, conducting security surveys of foreign
governments including defense industries, and determining delegated
authority among the services.[Footnote 8] In cases where a request for
transfer exceeds that authority, the service can forward the request to
the NDPC for its review. For some sensitive technologies, such as
stealth, the case is also forwarded for review to a special committee
that focuses on that particular technology.
Actions Taken to Expedite License Processing and Avoid Program Delays:
DOD and the JSF program office have taken the following four key
actions to avoid the potential negative effects on the program from
delays in obtaining licenses for transferring technology to partner
countries and foreign suppliers:
* In response to our 2003 recommendation, the JSF Program Office
directed the prime contractor to develop an international industrial
plan to anticipate time frames for national disclosure and technology
transfer decisions.
* Agencies involved in the JSF export-licensing process are expediting
the processing of license applications by dedicating staff to the JSF-
licensing process, providing consultation to applicants on draft
licenses, administering a prescreening process for the transfer of low
technology and nonsensitive items, and by allowing addendums to be
attached to license applications.
* The JSF prime contractor and agency officials have used options
available to them under the International Traffic in Arms Regulations
(ITAR), such as Global Project Authorization (GPA) and an exemption
used in obtaining foreign contractor bids and proposals, to help
facilitate the export control process and avoid program delays. The GPA
was intended to allow for technology transfer decisions regarding
certain technologies to be made in 5 days or less; however, its use has
been limited. Use of the bid and proposal exemptions is intended to
avoid program delays by providing foreign contractors with information
needed to compete for contracts without first obtaining an export
license.
* Issues related to the releasability of classified information,
technology, or systems to foreign partners are addressed as they arise
in the JSF program because of the involvement of international partners
in the early design phase of the program. According to DOD officials,
they are incorporating new practices, such as stakeholder meetings,
that are intended to facilitate a timely and collaborative decision-
making process.
Anticipating Technology Transfer Needs:
In July 2003, we reported that due to the early involvement of
international partners in developing the system, the JSF program has
had to mitigate a particular set of challenges related to technology
transfers. To address these challenges, the prime contractor needs to
anticipate time frames for national disclosure and technology transfer
decisions. The anticipation of these needs would allow for a timely
submission of license applications as well as providing time to
identify potential back-up suppliers, if necessary. Accordingly, we
recommended that the JSF Program Office direct the prime contractor to
complete an international industrial plan that:
* identified current and potential contracts involving the transfer of
sensitive data and technology to partner suppliers,
* evaluated the risks that unfavorable export decisions could pose for
the program, and:
* developed alternatives to mitigate those risks, such as using U.S.
suppliers.
In response to our recommendations, in 2003 the JSF program office
instructed the prime contractor to complete an international industrial
plan. According to the prime contractor, the plan provides a roadmap
that represents potential licensing activities as a subset of the
program schedule. Specifically, the plan identifies the need for a
license to transfer certain technologies to foreign industry. It
provides a mechanism for the prime contractor to anticipate "need"
dates for receiving export licenses and provides a mechanism for
identifying issues that may arise concerning the releasability of
information, technologies, or systems so that early action can be taken
to determine if an exception to the National Disclosure Policy or an
appropriate committee review should be pursued.
In addition to the creation of the JSF prime contractor's international
industrial plan, DOD has added guidance to the Office of the Secretary
of Defense's Acquisition Guidebook calling for the development of
similar industrial-planning tools in all programs with significant
international involvement prior to the system design and demonstration
phase. The guidance further states that the plan should project when
export licenses will be required in support of the acquisition process
and when critical milestones regarding National Disclosure Policy
implementation will need to be addressed.
These plans are intended to provide for early planning for the
program's proposed technology releases to foreign industry. They also
are intended to provide early planning for higher level special
technical reviews and approvals in support of proposed technology
releases to foreign industry.[Footnote 9] Further, they are intended to
establish a detailed export license approval-planning process for U.S.-
foreign industry cooperation to meet critical program and contract
timelines. The guidance recommends the plan include:
* a timeline that maps key projected export licenses against the
program acquisition schedule;
* a definition of the technologies involved in each export license;
and:
* a list of U.S. contractors (exporters) as well as foreign contractors
(end users) for each license.
Expediting the JSF Licensing Process:
Agencies involved in the export-licensing process have employed a
variety of methods to expedite the processing of license applications.
The Directorate of Defense Trade Controls (DDTC) within the Department
of State has dedicated one staff member to the JSF program.
Additionally, the Defense Technology Security Administration (DTSA)
within DOD has dedicated staff to specifically deal with issues related
to licensing, technical aspects, and policy matters for the JSF
program. These staffs coordinate directly with JSF program office staff
dedicated to the licensing process.
According to DTSA officials, along with dedicated staff, a new strategy
is being used to accelerate processing export licenses for the JSF
program. Officials across DOD provide advice and resolve issues with
license applicants through stakeholder meetings prior to formal
submission of license applications. DTSA officials described these
stakeholder meetings as a proactive measure to ensure that the license
applications are ready to be assessed when they are received. DTSA
officials stated that this process evolved in response to the concern
that licensing delays could affect the JSF program schedule and that
while stakeholder consultation could take up to six months, it usually
resulted in a shorter approval process. According to DTSA officials,
these stakeholder meetings were created because of the JSF program and
are currently unique to the program but would likely be incorporated
into future large scale international cooperative programs.
DTSA also prescreens all license applications to expedite the
processing of licenses that do not require review by other DOD
entities. Once an application is received from DDTC, it is prescreened
by DTSA officials to determine if it meets eligibility criteria for an
abbreviated review process. DTSA officials stated that criteria for
determining eligible items include low technology, nonsensitive items;
items widely available worldwide; and items that have previously been
approved through the process, among others. According to DTSA
officials, prescreening has been taking place for 1 year to 2 years,
and the typical time frame for a license in the abbreviated review
process is 2 days to 5 days.
The use of addendums to supplement license applications is another
initiative that evolved in an effort to avoid delays in the JSF
program. When additional information or clarification is needed before
a license can be approved, officials from DDTC and DTSA have agreed to
allow the applicant to attach addendums that include more specific
technical information than initially provided. The addendums provide
context and clarity to the application. Previously, the license would
have been returned with no action, requiring a resubmission and restart
of the license process.
Implementing Global Project Authorization and Making Use of Bid and
Proposal Exemptions:
Another mechanism for expediting license processing is the use of a
Global Project Authorization (GPA). The GPA is a comprehensive export
authorization for international cooperative projects authorized by the
ITAR.[Footnote 10] An approved U.S. company submits an "Implementing
Agreement" request to DDTC for authorization to export to an approved
foreign company. DDTC can evaluate the request and based on compliance
with an established set of conditions may authorize the transfer
without sending the request through the formal licensing process. An
implementing agreement under the GPA is expected to be approved in
about 5 days.
The Department of State, DOD, and the prime contractor agreed to the
GPA for the JSF program based on the following conditions:
* Technologies available for transfer through a GPA implementing
agreement are based on a predetermined list of unclassified, low
technology, nonsensitive items.
* In using the GPA, both domestic and foreign companies must be on an
approved list. The approved list was developed by the Department of
State and DOD. There are currently 46 U.S. companies and 446 foreign
companies that have been authorized to utilize implementing agreements
under the GPA for the JSF program.
* Approved companies must follow a standard agreement format and
special application process.
While the GPA is designed to approve transfers within 5 days, its
usefulness has been limited. Of the 46 U.S. companies eligible to use
the GPA, only 3 have exercised that option. In 2005, only two
implementing agreements were approved, and they were actually submitted
in 2004. Only one implementing agreement was submitted in 2005, and it
was returned without action. Approved companies that wish to use the
GPA must meet a special set of compliance requirements, imposed by the
State Department, related to electronic record keeping and securing
data. Officials from the JSF program office, DTSA, and the prime
contractor said that many companies have chosen to use the traditional
license process instead of the GPA to avoid the extra costs and
administrative burdens associated with these compliance requirements,
such as the investment associated with the development of electronic
databases. These issues also make the GPA especially difficult to use
for smaller companies. Further, the GPA was authorized only for the
system development and demonstration phase of the program and would
need to be reauthorized for the production phase.
Another practice used by the JSF program office to avoid program delays
and provide for competition among U.S. and foreign suppliers is the use
of an exemption under the ITAR for the purpose of obtaining bids and
proposals from foreign contractors. On March 8, 2004, DTSA issued
guidance to the military departments on how to certify the use of ITAR
exemptions. The guidance identifies five sections under the ITAR by
which the U.S. government may certify exemptions.[Footnote 11] Section
125.4(b)(1) of the ITAR[Footnote 12] provides that technical data,
including classified information, may be disclosed pursuant to an
official written request or directive from the U.S. Department of
Defense without obtaining an export license. This exemption has been
unofficially labeled the "bid and proposal exemption" by the JSF
program office, because the primary use has been in the process of
obtaining bids and proposals from foreign contractors. According to Air
Force officials, the bid and proposal exemption is only certified for
use to export unclassified technical data to a foreign contractor if it
is in the interest of the U.S. government.
Under this exemption, the JSF program allows approved U.S. contractors
to transfer technical data on proposed work to foreign contractors. The
Air Force periodically publishes an exemption certification that
provides scope and limits on the transfers, such as limiting the
defense services and technical data included in these exemptions to:
* build to print --a defense article can be produced from engineering
drawings without any technical assistance from a U.S. exporter--and:
* build/design to specification --a foreign consignee can design and
produce a defense article from requirement specifications without any
technical assistance from the U.S. exporter.
These exemptions must not include:
* design methodology --the underlying engineering methods and design
philosophy utilized;
* engineering analysis --analytical methods and tools used to design or
evaluate an article's performance against operational requirements;
and:
* manufacturing know-how --information that provides detailed
manufacturing processes and techniques needed to translate a detailed
design into a finished article.
The JSF Program Office must review, authorize in advance, and maintain
a record of all JSF technical data released under the authority of the
certification. So far, 350 requests from U.S. contractors to use the
"bid and proposal exemption" have been certified by the JSF program
office.
Addressing Disclosure Issues Early in the Program:
To prevent potential delays, decisions related to the releasability of
classified information, technologies, or systems to partner countries
are addressed as they arise throughout the development of the system.
While the Air Force, designated as the executive agent for disclosure
for the JSF program, has a certain level of delegated authority to
disclose classified military information to foreign governments and
international organizations, some requests exceed this authority. When
a request exceeds its delegated authority, the Air Force must submit a
request to the National Disclosure Policy Committee (NDPC) for an
exception to the National Disclosure Policy. Other committees that may
approve transfers include the Low Observable/Counter Low Observable
Committee that adjudicates requests to sell or transfer stealth
technology and the Committee on National Security Systems that
adjudicates requests to sell or transfer cryptologic information and
technology.
According to DOD officials, planning for foreign disclosure issues is
challenging because there are numerous processes among multiple U.S.
government agencies and committees with delegated authority for
management of foreign disclosure and export control requirements. There
are additional difficulties in a cooperative program like the JSF
program because of the involvement of the international partners early
in the design phase. In the JSF program, the prime contractor's
international industrial plan is used to anticipate licensing needs and
identify when discussions of releasability of classified information,
technologies, and systems are necessary. In addition, the stakeholder
meetings initiated by DTSA have provided a mechanism for disclosure
issues to be discussed prior to the formal submission of a license. As
a result, these discussions are held as the concerns arise so they do
not become major obstacles to the program schedule. These practices are
intended to resolve issues related to the releasability of classified
information, technologies, and systems and to ensure decisions are made
by the proper committees in a timely manner to avoid delays to the
license process.
For example, in cases where a request for transfer exceeds the Air
Force's delegated disclosure authority for a particular country, the
Air Force can seek an exception to the National Disclosure Policy. The
National Disclosure Policy establishes criteria and conditions for
releasing classified information, technology, or systems to other
countries. The NDPC determines if it is in the United States' interest
to allow for the transfer of information, technologies or systems by
granting an exception to National Disclosure Policy.[Footnote 13] The
NDPC is composed of members of the State Department, DOD (Joint Staff,
Army, Navy, and Air Force) and special members such as Department of
Energy and the Central Intelligence Agency, among others. In order for
a disclosure exception to be granted, it must be:
* consistent with U.S. foreign policy,
* consistent with U.S. military and security objectives,
* provided the same degree of security protection by the recipient,
* beneficial to the U.S., and:
* limited to information necessary for the purpose.
Although the NDPC seeks consensus within 10 days of a request, if any
member votes against approval of a request, there is a negotiation
period for no more than 20 days. If agreement still cannot be reached,
the NDPC chairman can make a decision. That decision can also be
appealed to the Deputy Secretary or Secretary of Defense. As of January
2006, the NDPC has granted six exceptions, as amended, to the National
Disclosure Policy for the JSF program.
Agency Comments:
A draft of this report was reviewed by the Department of Defense and
the Department of State. The agencies did not provide written comments
on the report. We received separate technical comments from the
Department of Defense and incorporated them as appropriate.
We are sending copies of this report to interested congressional
committees; the Secretary of State; the Secretary of Defense; the
Secretaries of the Navy and the Air Force; and the Commandant of the
Marine Corps. We will also make copies available to others upon
request. In addition, this report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please
contact me at (202) 512-4841. Key contributors to this report are
listed in appendix I.
Sincerely yours,
Signed by:
Ann Calvaresi-Barr,
Director,
Acquisition and Sourcing Management:
[End of section]
Appendix I: GAO Contact and Staff Acknowledgments:
GAO Contact:
Ann Calvaresi-Barr (202) 512-4841:
Staff Acknowledgments:
In addition to the individual named above, Tom Denomme, Matthew Ebert,
Kevin Heinz, Karen Sloan, and Adam Vodraska made key contributions to
this report.
[End of section]
Related GAO Products:
Tactical Aircraft: Status of the F/A-22 and JSF Acquisition Programs
and Implications for Tactical Aircraft Modernization. GAO-05-390T.
March 2005.
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike
Fighter with Different Acquisition Strategy. GAO-05-271. March 2005.
Defense Trade: Arms Export Control System in the Post-9/11 Environment.
GAO-05-234. February 2005.
Joint Strike Fighter Acquisition: Observations on the Supplier Base.
GAO-04-554. May 2004.
Defense Acquisitions: DOD Needs to Better Support Program Managers'
Implementation of Anti-Tamper Protection. GAO-04-302. March 2004.
Joint Strike Fighter Acquisition: Managing Competing Pressures Is
Critical to Achieving Program Goals. GAO-03-1012T. July 2003.
Joint Strike Fighter Acquisition: Cooperative Program Needs Greater
Oversight to Ensure Goals Are Met. GAO-03-775. July 2003.
Defense Trade: Better Information Needed to Support Decisions Affecting
Proposed Weapons Transfers. GAO-03-694. July 2003.
Export Controls: Processes for Determining Proper Control of Defense-
Related Items Need Improvement. GAO-02-996. September 2002.
Joint Strike Fighter Acquisition: Mature Critical Technologies Needed
to Reduce Risks. GAO-02-39. October 2001.
Defense Acquisitions: Decisions on the JSF Will Be Critical for
Acquisition Reform. GAO/T-NSIAD-00-173. May 2000.
Joint Strike Fighter Acquisition: Development of Schedule Should Be
Changed to Reduce Risks. GAO/NSIAD-00-74. May 2000.
FOOTNOTES
[1] GAO, Joint Strike Fighter Acquisition: Cooperative Program Needs
Greater Oversight to Ensure Goals Are Met, GAO-03-775 (Washington,
D.C.: July 21, 2003) and GAO, Joint Strike Fighter Acquisition:
Managing Competing Pressures Is Critical to Achieving Program Goals,
GAO-03-1012T (Washington, D.C.: July 21, 2003).
[2] The DOD Inspector General is also currently examining the JSF
licensing process.
[3] The unofficial term "bid and proposal exemption" is what the JSF
program office refers to in utilizing a regulatory exemption for
disclosing technical data pursuant to DOD authorization.
[4] Section 27 of the AECA, 22 U.S.C. § 2767 (2000).
[5] This is not necessarily the same as "best value" under the Federal
Acquisition Regulation (FAR), which is the expected outcome of an
acquisition that, in the Government's estimation, provides the greatest
overall benefit in response to the requirement. 48 C.F.R. §§. 2.101
(2005). Such a procurement is conducted competitively under FAR
procedures for contracting by negotiation using any one or a
combination of source selection approaches., 48 C.F.R, §§ 15.002(b),
15.101 (2005).
[6] Section 38 of the AECA, 22 U.S.C. § 2778 (2000).
[7] The statutory authority of the President to regulate exports of
defense articles and services was delegated to the Secretary of State
by Executive Order 11958, as amended. The International Traffic In Arms
Regulations implement that authority 22 C.F.R. parts 120-130 (2005).
[8] The NDPC is composed of members of the State Department, DOD (Joint
Staff, Army, Navy, and Air Force) and special members such as
Department of Energy and the Central Intelligence Agency, among others
(industry is not represented on the NDPC).
[9] Such reviews could be related to areas such as low
observable/counter low observable, anti-tamper, or cryptology.
[10] 22 C.F.R. § 126.14 (2005).
[11] The executive agent for disclosure is the Air Force for the JSF
program.
[12] 22 C.F.R. § 125.4(b)(1) (2005).
[13] The NDPC is also responsible for managing the National Disclosure
Policy, conducting security surveys of foreign governments including
defense industries, and determining delegated authority among the
services.
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548: